NEW DELHI: Consumers may have to shell out more money for their daily-use products as packaged consumer goods companies are considering another hike in products such as detergents, soaps, creams, edible oil and tea to offset inflationary pressure.
Several firms such as Hindustan Unilever, Dabur, Bajaj Consumer Care and Marico have raised prices in select core brands, but analysts and industry executives say that’s not enough for these companies to sustain margins, which necessitate further price hikes.
“Our price hike is adjusted in line with the hike in loose oil prices. If commodity prices continue to rise, we will have no option but to adjust the price as per the market condition," said Ajay Motwani, marketing head, Adani Wilmar, the maker of Fortune brand of edible oils.
Dabur has seen significant inflation. "There was overall five per cent inflation across materials. The company took a three per cent price hike and there will be a second round of hike to cover the remaining inflation impact," said Abneesh Roy, executive vice-president, Edelweiss Financial Services.
Hair care brand Bajaj consumer care has also has taken a price hike of 2.5 per cent which, Roy said, will partially cover the inflation, putting a pressure on operating margins.
The commodities which are particularly exacerbating domestic inflation include palm oil, a key ingredient for home and personal care items including soaps. Its price has seen about 50 per cent inflation. Then, brent crude prices crossed $65 per barrel in May 2021, more than double the year-ago level. Similarly, tea prices have risen 70-80 per cent in the last few months.
For companies that sell snacks at Rs 5 or Rs 10 price points, absorbing the costs is the only route available and so these producers are now bearing a higher burden of rising input costs than consumers. However, these costs can get increasingly passed on as demand revives.
“We are ensuring our best to absorb as much input costs as possible and pass minimal to our customers,” Mayank Shah, senior category head, Parle Products told this publication. He added that the company is not looking at a price hike immediately as it may have a negative impact on demand given the volatile situation of the economy where consumers are putting off discretionary spending.
How much hike
HUL has increased the prices of Lifebuoy and Lux by 6-7 per cent, while Marico raised the price of Saffola by as much as 50 per cent in the last two quarters. Britannia, too, indicated a hike in prices